Earnings season will officially kick off on July 13th, 2021 with J.P. Morgan Chase and several other financial stocks reporting that week. Since the coronavirus shut down, most earnings reports have seen positive reactions by the market participants. This was due to the watered down expectations by analysts. There is also a lot of easy money by the central banks which have been causing higher equity prices. This time around it looks as if the analysts have begun to raise expectations. We are also starting to hear lots of chatter that the Federal Reserve will begin to taper their current $120 billion a month in asset purchases later this year. Will the market participants start to punish under performing companies this earnings season? I believe so.
Traders and investors will really need to be on guard as this earnings season gets underway. This is a time where day traders will see a lot more opportunities as morning volume and volatility should increase. Day traders should also watch for opportunities in many of the sympathy plays that come along with earnings reports. For example, if a leading semiconductor stock falls or rallies after earnings the second tier semiconductors will often move in tandem with that stock. This happens with all sectors and industry groups. So get ready, earnings season is usually very good for day traders.
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